Phytochromes are biliprotein photoreceptors present in plants, algae, certain bacteria and fungi. Land plant phytochromes use phytochromobilin (PΦB) as the bilin chromophore. Phytochromes of streptophyte algae, the clade from which land plants evolved, employ phycocyanobilin (PCB), leading to a more blue-shifted absorption spectrum. Both chromophores are synthesized by ferredoxin-dependent bilin reductases (FDBRs) starting from biliverdin IXα (BV). In cyanobacteria and chlorophyta, BV is reduced to PCB by the FDBR phycocyanobilin:ferredoxin oxidoreductase (PcyA), whereas, in land plants, BV is reduced to PΦB by phytochromobilin synthase (HY2). However, phylogenetic studies proved the absence in streptophyte algae of any ortholog of PcyA and the presence of only PΦB biosynthesis related genes (HY2). The HY2 of the early diverging streptophyte alga Klebsormidium nitens (formerly Klebsormidium flaccidum) was already indirectly indicated to be involved in PCB biosynthesis. To provide the direct evidence of an intrinsic FDBR activity of this enzyme, we overexpressed and purified a His6-tagged variant of K. nitens HY2 (KflaHY2) in E. coli. In anaerobic bilin reductase activity assays, we found that KflaHY2 is a functional FDBR yielding mostly 3(Z)-PCB as the reaction product. Via coupled phytochrome assembly assays, we identified 3(Z)-phytochromobilin and 181,182-dihydrobiliverdin (181,182-DHBV) as intermediates of the reaction. With the help of site-directed mutagenesis two aspartate residues were identified to be critical for catalysis. Overall, our study gives insight into the evolution of the HY2 lineage of FDBRs.